The South Korean government will select 100 small and venture companies each year as “new security innovation firms” and provide intensive support, targeting businesses with advanced technologies in artificial intelligence, drones, robotics and space. Next year it will launch an investment company modeled on In-Q-Tel, the venture capital arm established by the U.S. Central Intelligence Agency, and inject 200 billion won ($138 million) in public funds over four years through 2030. The plan is to identify promising companies early and support them across the full cycle — from research and development to testing, investment, entry into defense and public markets, and expansion into the private sector.
The Ministry of SMEs and Startups said on the 3rd that it discussed follow-up plans for its “Direction for Fostering Future New Security Innovation Firms” at the second working-level council on new security, which included the Ministry of Economy and Finance, the Ministry of National Defense, the Defense Acquisition Program Administration and the Korea AeroSpace Administration. The meeting focused on detailed measures including the composition of the candidate pool, investment plans, the opening of defense data and support for field testing.
The policy differs from existing defense industry programs in both scope and target. While previous measures centered on weapons systems, defense contractors and startups, the new security policy extends support to advanced technologies that can be used simultaneously in military, public and private markets — including AI, semiconductors, sensors, robotics, drones and space. Eligibility also widens beyond startups and venture companies to small and medium-sized enterprises and early-stage mid-sized firms.
The government will first designate 10 strategic fields directly tied to national security and build a pool of related companies. The 10 fields are intelligent drones, multipurpose autonomous robots, defense AI systems, defense-dedicated AI chips, ultra-compact radar and optical sensors, new materials for extreme environments, small satellite constellations, unmanned aerial platforms, active cyber security, and quantum communications and computing. Companies already identified through existing programs — such as those selected under the ministry’s “Everyone’s Challenge Defense” initiative and the Defense Acquisition Program Administration’s “defense innovation companies” — will be recommended, and firms will also be able to apply directly. Candidates will be screened on criteria including whether they hold security-related technology, the share of revenue from such business and corporate value, after which companies with strong technological capability and growth potential will be designated as new security innovation firms.
The ministry plans to identify 100 innovation firms in the new security field each year. Selected companies will receive bundled support covering R&D, investment, personnel and field testing. To back their R&D, the government will provide actual defense data so firms can verify their technologies, and will operate test beds. The core of the investment support will be handled by a “Korean In-Q-Tel,” an investment company to be established as a subsidiary of the Korea Venture Investment Corp. The government plans to inject a total of 200 billion won over four years from next year through 2030 to create investment funds in the new security field. In 2027, the ministry and the Defense Acquisition Program Administration will each contribute 25 billion won from their budgets to form an initial fund of 50 billion won.
Unlike ordinary venture funds, the Korean In-Q-Tel will be financed entirely with government money. Its focus is on identifying technologies and companies needed for national security at an early stage rather than on returns. Starting with the vehicle, the government will also build an investment ladder tied to corporate growth stages. Early-stage funding will come from public money, followed by venture investment drawing on public and private capital such as the fund of funds and defense industry funds. Companies that later require large-scale capital will be supplied with tens of billions of won through vehicles such as Korea Strategic Technology Partners, a technology-focused asset manager being pursued by the Financial Services Commission. Through this, the government has set a goal of producing five companies valued at 1 trillion won and 50 companies with revenue of 100 billion won in the new security field by 2030.
The time it takes to bring advanced technologies into military use will also be sharply reduced. Under the current weapons acquisition system, technologies such as drones often take at least five years to move from the military’s requirement decision through development, testing and procurement. To address this, the government will introduce a Korean version of the U.S. “other transaction authority” (OTA) rapid procurement system. It will expand the ministry’s purchase-linked R&D programs and revise the national contract act to tie technology development agreements to purchase contracts. It will also expand an approach in which the military presents the mission it needs rather than detailed product specifications, leaving companies to propose solutions, along with an “agile” method that allows technical specifications to be changed flexibly during development. The government expects the changes to shorten the period for applying advanced technologies in the field to around one year.
Intellectual property rules for dual-use technologies will also be revised. Under the current system, the government owns the IP for some technologies developed with public support, which critics said limited companies’ ability to use them in commercial products or overseas markets. Going forward, the government will allow IP for dual-use technologies developed by new security innovation firms to be jointly owned by the government and the company, so it can be used for private-market entry and exports. Technologies deemed inappropriate for external use on national security grounds may still be restricted after review by a separate committee.
To codify the support framework, the government is pushing for a special act on fostering future new security innovation firms. It is considering having lawmakers introduce the bill this month. If the National Assembly passes it this year, the government aims to put it into effect within six months of promulgation. Even before the legislation, it plans to move ahead with measures possible under current rules, including building the candidate pool, opening defense data and supporting field testing.
“To secure future new security competitiveness, it is important to quickly identify innovative technologies held by the private sector and connect them so they can be used in actual defense and security settings,” said Park Yong-soon, head of the ministry’s SME policy office. “We will work closely with related ministries to build an ecosystem in which innovative small and venture companies can clear the barriers of investment, R&D, field testing and procurement, and grow into core companies leading the future new security field.”
#NewSecurity#InQTel#DefenseTech#KoreaStartups#DefenseAI#Drones
Original reporting by Ryu Suk for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
View Korean originalTranslation Policy
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